LONDON – Space insurers are expected to generate more than USD400 million in profit for 2009 provided there are no claims before the end of the year, according to Aon’s International Space Brokers, the largest specialist risk adviser in this sector. The space insurance market has been very profitable over the last five years and this will inevitably lead to more competitive premiums for satellite operators in the New Year as the capacity for space risks continues to increase.
In 2009, more than USD800 million of premiums is expected to be paid for ‘all risks’ launch and in-orbit insurance. The third quarter of 2009 saw five major insured launches (two Ariane 5s, two Protons and one Long March 3B – of which ISB were involved in four), which generated an estimated USD154.6 million of premium income for the space insurance market. The Long March 3B launch fell short of the target orbit due to a third stage anomaly but engineers managed to manoeuvre the Palapa D spacecraft to the correct orbit which resulted in a loss of only one third of the spacecraft life.
Losses occurring so far this year amount to between USD 400 and USD 450 million, while the other major launch vehicles have performed flawlessly. It means insurers will have been profitable for four out of five years, with the only exception being a deficit in 2007. The favourable market conditions are attracting more capacity into the space insurance market, enabling risks to be placed at better terms due to increased competition. As a result, rates in 2009 to date have continued their slow, but steady decline.
Clive Smith, space business unit leader, said: “Demand for satellite communication capacity continues to grow, from delivering broadband and television to surveying the earth for pollution, resources and disaster monitoring. The recession made it more difficult for some operators and particularly new projects to raise capital but nevertheless there are a number of interesting projects that are still progressing well. The health of the insurance industry means it’s well positioned to support satellite programmes by providing sufficient capacity to satisfy investor requirements.”
Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 37,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon’s industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world’s best broker by Euromoney magazine’s 2008 and 2009 Insurance Survey, Aon also ranked highest on Business Insurance’s listing of the world’s largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007 and 2008, and Aon was voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.